United

Algorand

The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Kraken, one of the prominent crypto exchanges.
The <a href="https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-237.pdf" rel="noopener noreferrer nofollow" target="_blank">SEC alleges</a> that Kraken has been operating as an unregistered broker, clearing agency, and dealer, which marks a continuation of the regulator’s strict stance against crypto trading platforms.
The lawsuit, filed on Monday, raises serious concerns about Kraken’s financial practices, particularly the commingling of customer and corporate funds, a practice that the SEC claims has put substantial amounts at risk.
According to the SEC, Kraken has entangled up to $33 billion in customer crypto assets with its own corporate assets, based on reports from the company’s independent auditor.
This action has created a “significant risk” to the integrity and safety of customer funds. Furthermore, the lawsuit highlights that Kraken has also mingled more than $5 billion of its customers’ cash with its corporate funds, occasionally using customer cash to cover operational expenses.
The SEC’s complaint echoes its previous legal actions against other major crypto exchanges such as <a href="https://crypto.ro/en/news/binance-responds-to-sec-lawsuit-with-firm-defense-and-vows-to-defend-crypto-industry-and-user-assets/" rel="noopener noreferrer nofollow">Binance</a> and <a href="https://crypto.ro/en/news/coinbase-faces-sec-lawsuit-over-unregistered-securities-allegations/" rel="noopener noreferrer nofollow">Coinbase</a>.
This year, the regulator sued both platforms, alleging similar unregistered operations. While those cases are ongoing, the SEC has previously settled similar allegations against the now-defunct U.S. wing of Bittrex.
Another critical aspect of the lawsuit is the SEC’s classification of certain tokens as unregistered securities.
The regulator specifically mentions tokens like Algorand (ALGO), Polygon’s MATIC, and NEAR, arguing that Kraken played a direct role in promoting these tokens to investors. This aligns with the SEC’s broader view of crypto assets and its regulatory approach to them.
Responding to the SEC’s allegations, Kraken issued a statement disagreeing with the complaint and affirming its stance that it does not list securities.
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
 We strongly disagree with the SEC claims, stand firm in our view that we do not list securities, and plan to vigorously defend our position.
 As we have seen before, the SEC argues that <a href="https://twitter.com/krakenfx?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow" target="_blank">@krakenfx</a> should “come in and register” with the agency, when there is no clear path to…
 — Dave Ripley (@DavidLRipley) <a href="https://twitter.com/DavidLRipley/status/1726754746265227386?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow" target="_blank">November 21, 2023</a>
</blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
The exchange emphasized its intention to vigorously defend its position. Kraken criticized the SEC’s approach to regulation, pointing out the lack of clear regulatory guidelines and the agency’s preference for enforcement actions over constructive regulation.
The exchange underscored the need for effective market regulation that recognizes the unique characteristics of cryptocurrencies and advocated for Congressional action to bring clarity to the regulatory environment in the U.S.
Kraken also highlighted the SEC’s previous action related to its staking services, with the regulator settling charges earlier this year.
As the legal battle unfolds, the cryptocurrency industry watches closely, recognizing the potential implications of this lawsuit for the broader regulatory landscape of digital assets in the United States.

Kraken faces SEC lawsuit for alleged regulatory violations and commingling funds

crypto.ro global

Other articles published on Nov 21, 2023

Just In: Ukraine Uncovers First Crypto Bribe in Anti-Corruption Crusade

Upbit Ensures User Asset Safety During Qtum Hard Fork: Temporary Suspension Of QTUM

Kraken co-founder labels SEC as USA’s chief obstacle

Tether Partnership Gone Wrong? Britannia Bank Hit With Lawsuit Over $1B Deposit

Celsius debtors to restructure defunct lender into Bitcoin miner instead of asset transfer

Phoenix Group’s Meteoric IPO Success: Retail Investors Lead a 180x Surge in Confidence

Join our free newsletter for daily crypto updates!